Microeconomic Reflection

Both potential and existing competitors influence average industry profitability. The threat of new entrants is usually based on the market entry barriers. They can take diverse forms and are used to prevent an influx of firms into an industry whenever profits, adjusted for the cost of capital, rise above zero. In contrast, entry barriers exist whenever it is difficult or not economically feasible for an outsider to replicate the incumbents’ position (Porter, 1980b; Sanderson, 1998) The most common forms of entry barriers, except intrinsic physical or legal obstacles, are as follows:

Threat of New Entrants - The easier it is for new companies to enter the industry, the more cutthroat competition there will be. Factors that can limit the threat of new entrants are known as barriers to entry. Some examples include:

1. Describe each market structure discussed in the course (perfect competition, monopolistic competition, oligopoly, and monopoly) and discuss two of the market characteristics of each market structure.

The supply and demand in microeconomics relies on competitors and the prices. The equilibrium is a point at which all the bidding is done.

Understanding the concepts of macroeconomics and microeconomics help understand factor that affects shifts in supply and demand because now one can see with clarity what are the categories and what those categories are, the ones influence supply and demand and how this same factor may bring equilibrium.

Looking back, I did not have a clue. My days were filled with doing long division homework, attending football practice, and hanging out with my friends. I was living a happy and carefree life, loving every minute of every day - until I faced a test. Mater Dei was an all-boys school that had its fair share of traditions such as “Griffin Day,” when school was called off and a complete day of activities and camaraderie filled the day. When I was in the sixth grade, the aftermath of the economic recession truly hit home. I could detect an undercurrent of upset in my house, judging by the worried looks on my parent’s faces and their short fuses when I crossed the line. To their credit, they shielded me from the harsh reality of my father losing his job at a real estate firm. With private school tuition bills on the line, they did not know how they were going to come up with the funding to finance my education. Seeing how well-adjusted I was in a school that focused on shaping character and imparting a value-system, they would sacrifice at all costs to maintain my educational placement. During that difficult time period, I

There have been many topics that we have covered in class that have opened my eyes to how behavioral economics play a role and are seen in everyday life. I really enjoy examining these topics that we learn in class and when reading. Last nights reading of Kahneman had me thinking of a particular topic of outcome bias and how that impacts our illusion of understanding. Kahneman defines outcome bias as give too little of credit to the decision maker when he makes a decision with a good outcome and blames the decision maker when he made a good decision with a bad outcome. This had me thinking of a particular instance two weeks ago when the Twins were playing the Yankees in the wild card game. Paul Molitor, the Twins manager chose to keep the pitcher in the following inning after giving up a couple runs in the prior inning. The pitcher the following inning gave up another run or two giving the Yankees the lead. The next day driving to class, I was listening to KFAN the sports radio and they were saying how this decision cost the Twins the game and should cost Molitor his job next year. When I heard this I was very surprised, not being a Twins fan I thought that they would be glad with the turn around the team made this year, having been one of the worst teams in the MLB. When I was reading last night and I came across outcome bias, I immediately went back to this moment and it was clear that the talk show radio announcers had participated in outcome bias. Even though

In the United States, minimum wage has remained at a low number for several years. Minimum wage is defined as the lowest possible income that an employer can legally pay an employee. This ensures that all people are fairly paid and not defrauded by companies or businesses. Minimum wage is considered a price floor and the minimum wage laws determine the lowest price possible that any employer must pay for labor. In an economic model, the quantity of supplied is greater than the quantity demanded and the minimum wage is above equilibrium price and quantity. Minimum wage prevents labor supplied and labor demanded from moving

Microeconomics is the economic influences that impact at the micro, or firm, rather than macro level. The study of this subject is one that is highly valuable for any studying business with the provision of knowledge that will increase understanding of different influences and support the decision making processes. With the knowledge gained, along with the skills in applying that knowledge developed through class work and exercises for the different modules, there has also been the development of increased confidence, both personal and in the theories, in using the relevant concepts and tools in a practical setting.

In this case some big companies dominate the whole industry and as a result the small companies

I have gained much respect for Economics as a field of study during this course. Being a political science major, I can honestly say that there isn’t all that much science in many of the topics. Conversation in political science can be argumentative and normative without concrete reason or evidence. Economics, on the other hand, is intuitive and backed by research. More refreshingly, economics simply puts its research out for the world to see, and sure individual economists may voice their opinions about public policy, but as a field, it is based mainly on positive statements; it tells it like it is without venturing into how it should be. Economists do have a rough job in a way, they can’t simply do research by conducting regular experiments like altering the nation’s monetary supply or increasing the minimum wage to study the effects on unemployment. It is impressive that they find a way to use existing data to draw their conclusions. They really make the most out of what they are given. Additionally, it is nice that assumptions about complex economic topics are made so even students in basic principles courses can understand the concepts in simple economic models.

Some of the most compelling topics that I learned in this topic only came into focus at the end of the course. Economics is a very large and complex study and reflecting on this subject, piece by piece, requires some patience and ability to put the pieces together. The relationships between simple choices, such as supply and demand, drives all economic and commercial exchange but only through the lens of economic models that attempt to layout this system by combing mathematical principles and psycho-social evaluation. All in all, this was very interesting introduction to some of the complex drivers that propel society.

If an industry is profitable, it will become a magnet to attract more competitors looking to do same business with us. If it is easy for these new entrants to enter the market, this poses a threat to the firms already competing in that market. Threat of new entrants is one of the forces that shape the competitive structure of an industry (Marc, 2014). A high threat of entry means new competitors are attracted by the profits of the industry and can enter the industry easily. New competitors entering the marketplace can make the market share and profitability of existing competitors more threaten cause the existing competitor to make some changes to existing product quality or price levels. A high threat of new entrance can make an industry more competitive and decrease profit potential for existing competitors whereas a low high threat of new entrance can make an industry less competitive and increases profit potential for the existing

. Through the process of reading, I learned many things about the economy. First of all, I learned that it is a much more difficult decision to come to in regards of how much government involvement in the nation’s economy is enough, how much is too little, and how much is not enough. I also learned that trying to keep the economy stable and productive is a constant and difficult struggle, and that it is often difficult to even know what needs to or can be done in order to stabilize it. While I find economics to be somewhat boring (I am a music major and largely emotionally driven, which means that my entertainment is usually emotionally involving somehow), I actually enjoyed how Wheelan explained economics in this book. While I would not read it for fun, reading this book as an assignment was not painful.

According to McConnell and Brue “Economists group industries into four distinct market structures: pure competition, pure monopoly, monopolistic competition, and oligopoly. These four market models differ in several respects: the number of firms in the industry, whether those firms produce a standardized product or try to differentiate their products from those of other firms, and how easy or how difficult it is for firms to enter the industry” (McConnell & Brue, 2005, chap. 21). As part of the MBA/501 course the learning team is tasked with identifying a company for each market structure, and describe the pricing